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Financial Regulation: Weekly Update. 19 October 2018

October 19, 2018
Highlights: BCBS issues stress testing principles, consults on treatment of cleared derivatives in the leverage ratio, and issues statement on window-dressing behaviour for the leverage ratio. The NGFS issues its first progress report. OJEU publishes implementing regulation regarding critical benchmarks. PRA and FCA issue consultations on climate related financial risks.

Global | More moderate and heterogeneous growth, with increasing risks

October 19, 2018
We have revised downwards our forecasts for global growth to 3.7% in 2018 and 3.6% in 2019 due to the recent slowdown in emerging markets, in a context of monetary policy normalization and intensification of risks related to protectionism and political uncertainty. The US is expected to grow at 2.8% in 2018 and 2019, while the Eurozone and China will decelerate next year.

China | Growth slowdown in Q3 calls for more easing measures

October 19, 2018
Sep economic indicators, together with Q3 GDP, were reported today. Q3 GDP growth slowed down to 6.5% y/y, compared with 6.7% y/y in the previous quarter and 6.6% of the market consensus. This suggests the economy further moderated amid the escalation of trade war and domestic deleveraging. We expect monetary and fiscal policy to become more pro-growth in the rest of year.

U.S. | Oil Prices Outlook. Third quarter 2018

October 17, 2018
U.S. sanctions to Iran, concerns on OPEC spare capacity and the potential impact of trade wars will weigh on oil prices through the rest of the year. U.S. production remains strong, but transportation challenges have widened the gap between WTI and Brent. Solid demand supported by China, India and the U.S.

Turkey | Some slow-down signals, more to come

October 17, 2018
The sharp decline in the unadjusted IP (-11%) in August, which is in line with our expectations (BBVA -11.5%), also implies a yearly contraction in industrial production in 3Q18 which will weigh on GDP growth. With 40% of information, our monthly GDP indicator (GBTRGDPY Index at Bloomberg) nowcasts a 2% yoy growth in September and we expect it to continue to decelerate.

European banks and the challenge of MREL

October 15, 2018
Who will pay for the next banking crisis in Europe, and how? One of the lessons learnt from the last global financial crisis is that there must be an end to public bail-outs of banks. To achieve this, it is necessary to define which creditors and which liabilities absorb losses in the event of an institution’s resolution.

U.S. Economic Outlook. October 2018

October 13, 2018
Economic conditions remain consistent with high growth in 2018 & 2019, upside risks to inflation contained. FOMC remains poised to raise rates in December. Baseline assumes three additional increases in 2019. Labor market slack continues to decline, as unemployment rate nears 50 year lows at 3.7%.

Mexico |Main source of credit growth to private sector continues to be credit to companies

October 12, 2018
In August 2018, the nominal annual growth rate of the balance of the current credit portfolio granted by commercial banks to the private sector was 11.2% (6.0% real). This rate was lower than the previous month (11.4%) and the same month of 2017 (13.3%).

Financial Regulation: Weekly Update. 11 October 2018

October 12, 2018
Highlights: FSB issues report on crypto-assets. EBA updates its risk dashboard. Council of the EU adopts conclusions on climate change and anti money laundering directive. EC adopts delegated acts on supervisory reporting. UK Treasury issues documents and Statutory Instruments preparing for Brexit. US Agencies Agencies issue final Swap Margin Rule.

U.S. Recession Risk Monitor. Fourth quarter 2018

October 11, 2018
The probability of an economic recession within the next 12 months remains low. Alternative models show increasing likelihood but also indicate relatively low probability. Overall financial conditions remain accommodative. However, a sharp correction in equities and corporate spreads is possible. Economic fundamentals for households and financial institutions remain solid.

U.S. | Fighting Ocean Plastic Pollution

October 11, 2018
Bringing opportunities in the circular economy. A crisis of planetary proportions. An ocean of plastic. Preventing plastics from reaching the ocean. For banks, plastics could be more than credit cards.

Financial Regulation Outlook. Fourth quarter 2018

October 11, 2018
European NPLs: A complex problem. IMF report on the euro zone resolution framework. UK proposal for financial services post Brexit. What to expect from the forthcoming Spanish financial sandbox?. ESAs reform: Slow legislative process in the EU institutions. Three years of CMU: Progress and challenges ahead.

Cantabria Economic Outlook 2018

October 9, 2018
The economy of Cantabria grew 3.2% in 2017 and will moderate its growth rate to 2.8% in 2018 and 2.6% in 2019. It will create around 10,000 jobs until the end of 2019, although some risks are more likely now than a few months ago. The level of absolute and per capita GDP will recover, but the challenge is to create more and better employment.